Scottish Court of Session Decisions

The judicial factor on the trust-estate of Drummond Brothers applied to the Court for power to sell certain heritable subjects at 82 George Street, Edinburgh, belonging to the factory.

Upon 19th October 1893 the Lord Ordinary authorised the judicial factor to expose them for sale by public roup, after due advertisement, at the upset price of £9750, and if not sold at or above said upset price, to re-expose the same for sale by public roup, after due advertisement, at such reduced upset price as the Accountant of Court might fix, or to sell the same by private bargain at a price not less than that at which they had been publicly exposed for sale.

The judicial factor duly advertised the property, but did not expose it for sale by public roup, and in May 1894 sold it by private bargain for a sum of £9800. All the heritable creditors, including postponed bondholders who would not receive any part of their debt, approved of the sale, and Mr Hippolyte Blanc, architect, reported that in his opinion the transaction was a judicious one. The purchaser, however, was apprehensive of the validity of the title he would get, and accordingly the judicial factor presented a petition praying the Court to approve of the sale. Along with the petition he lodged a report by the Accountant of Court, saying that in his opinion the factor's acting in selling by private bargain might be approved of.

Upon 23rd June 1894 the Lord Ordinary ( Low) having heard counsel for the factor and for the purchaser, reported the case to the First Division.

“ Opinion.—The petitioner is judicial factor upon a trust-estate. In May 1893 he obtained authority from the Court to sell certain house property in George Street, Edinburgh, belonging to the trust by public roup at the upset price of £9750, and if the property was not sold at or above that price, to re-expose it for sale at such reduced upset price as the Accountant might fix, or to sell the property by private bargain at a price not less than that at which it had previously been publicly exposed.

The petitioner, before he had exposed the property for sale by public roup, received a private offer to purchase it at the price of £9800. He accepted the offer, and has now presented the present application for approval of the sale. The Accountant of Court reports in favour of the application being granted.

The purchaser appeared, and referred to a judgment of the First Division in petition Clyne, June 5, 1894, in which it was held that although trustees might obtain authority from the Court to sell, they could not first conclude a contract of sale and then ask the approval of the Court. The purchaser in this case is quite willing to implement his contract, but he contended that in view of the decision referred to, it was doubtful whether the Court had power to confirm the sale, and he naturally desires to have an unimpeachable title.

The parties asked that the case should be reported to the Inner House, and as it raises a question of importance not only to the parties, but in regard to the administration of trust-estates in the hands of judicial factors, the Lord Ordinary has thought it right to do so.

Page: 778↓

There is this distinction between the present case and that of Clyne, that there the trustees had not, before entering into the contract of sale, obtained any authority to sell, while here authority was granted to the judicial factor to sell, and the present application has only been rendered necessary because he did not proceed precisely in terms of the powers which were conferred upon him.”

Argued for the petitioner—He had obtained power to sell from the Court, and that by private bargain failing sale by public roup. No doubt he had sold by private bargain without publicly exposing the property, but he had secured £50 more than the upset price, had acted in the best interests of the estate, and with the approval and consent of all interested. In Clyne's case, June 5, 1894, 31 S.L.R. 692, a testamentary trustee, without any power of sale in the trust-deed, had sold, and asked the Court to confirm the sale. Here there was a power of sale in the original trust-deed, and the factor had obtained a power of sale from the Court. If the course followed was not in entire conformity with that indicated by the Court, it was in substantial accordance with it, and might well be confirmed. In the case of Gilray, March 18, 1876, 3 R. 619, the Court had approved a sale effected by a curator bonis without any powers.

Argued for the purchaser—He was perfectly willing to buy the property, but he was entitled to an unimpeachable title. The factor here had practically sold without power, because he had received power under a definite limitation, which he had disregarded. The power in the original trust-deed was no good to a judicial factor; he required authority from the Court before he could sell. It was doubtful whether the Court could approve of what had been done, although they might authorise its now being done.

At advising—